- Americans worried about their jobs and economic prospects
are raiding their piggy banks and spare-change drawers - to the tune of
billions of coins.
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- Officials at the U.S. Mint, which produces all the coins
in circulation, said that, with the economic downturn, the nation will
consume vastly fewer new coins. It therefore has begun laying off 357 workers
in Philadelphia, San Francisco, Denver and other places to curtail coin
production and protect its profits for the U.S. Treasury.
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- Mint officials believed as recently as the summer that
the nation would need 23 billion new pennies, nickels, dimes and quarters
in 2002. But the Mint bean counters reduced that number to 15 billion when
it became apparent that the economy would not rebound quickly after the
Sept. 11 terrorist attacks.
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- "This all happened fairly rapidly," a Mint
spokeswoman, Susan Valaskovic, said yesterday. "Now you understand
why we're reducing employees in Philadelphia."
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- The decline in demand for coins from the U.S. Mint is
"staggering," and reflects the slumping national economy and
other factors, said James Benfield, executive director of the Coin Coalition,
a lobbying group in Washington that supports the dollar coin.
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- The U.S. Mint has produced too many coins in the last
year, and now is coping with tens of millions of dollars in unexpected
coins flowing into the economy as people scrounge through drawers, old
suits, jars and cans for coins.
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- "As the economy slows down, this stuff comes out
of the closet," Benfield said. "When you're out of a job, you
cash in all your coins."
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- The process has been helped substantially by Coinstar
Inc., a rapidly growing Bellevue, Wash., company that operates a network
of 9,300 coin-changing machines in supermarkets throughout the United States.
The machines count shoppers' accumulated coins and dispense a voucher that
shoppers can exchange in the store for cash or groceries. Coinstar estimated
yesterday that Americans have $7.7 billion in spare change still hanging
around their homes.
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- More broadly, Valaskovic said a slower economy has led
to fewer cash transactions at department stores and other retailers nationwide,
reducing demand for the U.S. Mint's presses to stamp out new coins.
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- "If a store in King of Prussia is ordering fewer
coins from its local bank, and that local bank is placing fewer orders
for coins with the Federal Reserve . . . the Federal Reserve is ordering
fewer coins from us," she said.
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- Layoffs and other cutbacks are necessary to preserve
the Mint's profit, which is the difference between the cost of manufacturing
a coin and its sale price to the Federal Reserve Bank. The Federal Reserve
controls the amount of money in the nation's financial system.
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- For instance, the U.S. Mint manufactures a quarter for
4.5 cents, but charges the Federal Reserve the full 25 cents. The 20.5-cent
profit is funneled into the U.S. Treasury to help run the federal government.
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- With demand low, the Mint, like a private manufacturer,
has to cut its overhead.
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- It plans to eliminate about 12 percent of its 2,861 employees
at its operations in Philadelphia; Denver; San Francisco; West Point, N.Y.;
and Washington. Coins for the eastern states are manufactured in Old City
in Philadelphia, and coins for the western states are manufactured in Denver.
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- Last month, the Mint fired 31 temporary employees and
laid off 73 seasonal employees in Philadelphia. It expects to eliminate
an additional 42 positions by year's end.
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- Bob Fernandez's e-mail address is bob.fernandez@phillynews.com.
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- http://inq.philly.com/content/inquirer/
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